Category: Returns under GST

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Exemption to small suppliers of goods from monthly filing and tax by Notification 40/217 dated 13-10-2017

Section 148 of the CGST Act allows the government to notify certain classes of registered persons, and the special procedures to be followed by such persons including those with regard to registration, furnishing of return, payment of tax and administration of such persons.

 

The notification applies to :

  1. Registered person whose aggregate turnover in the preceding financial year did not exceed one crore and fifty lakh rupees

OR

  1. The registered person whose aggregate turnover in the year in which such person has obtained registration is likely to be less than one crore and fifty lakh rupees

AND

who did not opt for the composition levy under section 10 of the said Act

 

 

In pursuance of powers u/s 148, above suppliers have been required to file returns and make payment of tax on prescribed basis. The method of filing and tax payment has however not been prescribed as yet.

 

Note

  1. While the same notification deals both exemption from tax on advance payments and monthly filing and tax payment, the exemption form tax on advance payment is confined to outward supply of goods but exemption from monthly filing of return and tax shall apply to both small suppliers of goods as well as services.

 

  1. Further, turnover for 2016-17 being more than 1.5 crore can not debar, in the opinion of author from monthly filing and tax because the concept of aggregate turnover has been put into operation by GST law only. So, people having higher turnover but who have not yet crossed the 1.5 crore limit might empt to avail the exemption from monthly fling due to language of the notification.

 

  1. Further although composition dealers are not covered but they are already exempted from monthly filing and payment of tax u/s 39(2)
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The discrepancy communicated in FORM GST MIS-3 to the supplier has been rectified in subsequent return filed by the recipient. Can the supplier avail the reduction in output tax liability after the recipient rectifies the return?

  1. The reduction in output tax liability which remains unmatched is added to the output tax liability of the supplier in the month succeeding the month in which FORM GST MIS-3 is communicated.
  2. However, if the discrepancy is rectified within the date for filing the return for the period of September of the succeeding financial year or before the annual return is submitted by him, then the supplier is eligible to reduce the output tax liability to the extent of differential tax liability paid on account of such mismatch.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.45)

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Whether the supplier is liable to pay interest on the differential tax liability arising due to the mismatch of reduction in output tax liability or due to duplicate claim of reduction of output tax liability?

  1. As per Section 43(8) of the CGST Act, the supplier is liable to pay interest on the differential tax liability arising on account of mismatch of reduction in output tax liability or due to duplicate claim of reduction in output tax liability at the rate specified in Section 50(1) of the CGST Act.
  2. The interest is liable to be paid from the date on which reduction in output tax liability is claimed till the date on which such differential tax liability is added to the output tax liability of the supplier.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.44)

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The mismatch in reduction in output tax liability is due to the incorrect details entered by the recipient of the supply. What is the procedure to followed by the supplier?

  1. If there is a mismatch in the claim of reduction of output tax liability, a communication in FORM GST MIS-3 will be sent to the supplier and a communication in FORM GST MIS- 4 will be sent to the recipient of such supply.
  2. If the discrepancy is due to the incorrect particulars entered by the recipient, then the recipient can rectify such discrepancy in its return for the month in which GST MIS-4 is communicated to him.
  3. Once the discrepancy is rectified and the reduction in output liability is matched, a communication in
    FORM GST MIS-3 will be sent to the supplier and the claim of reduction in output tax liability will be finally accepted.
  4. However, if the recipient does not rectify the discrepancy in the month in which such discrepancy is communicated, the amount of tax payable on account of such discrepancy will be added to the output tax liability of the supplier for the month succeeding the month in which FORM GST MIS-4 is communicated to the recipient.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.43)

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Deduction of output tax liability claimed on account of credit notes issued does not match with the corresponding reduction of input tax by the recipient? What is the procedure to be followed?

  1. If the reduction in output tax liability claimed by the supplier does not match with the corresponding reduction of input tax by the recipient, then such discrepancy will be communicated to the supplier in FORM GST MIS-3 and to the recipient in FORM GST MIS-4 on or before the last day of the month in which such matching is carried out.
  2. On receipt of such communication, either the supplier or the recipient can rectify the details so as to match the claim of reduction in output tax liability and corresponding reduction of input tax credit.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.42)

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The assesse has inadvertently reduced its output tax liability twice on the same credit note. What are the consequences of such duplicate claims?

  1. As per Section 43(1) of the CGST Act, all claims of reduction in output tax liability on account of credit notes will be matched so as to ensure that the supplier does not claim such deduction more than once for a particular credit note.
  2. Where the supplier claims such deduction more than once, such discrepancy will be communicated to the supplier in GST MIS-3.
  3. Such duplicate claim of reduction of output tax liability will be added to the output tax payable of the supplier for the month in which such GST MIS-3 is
    communicated to the supplier.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.41)

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Whether the credit note issued by the supplier has to be matched with the corresponding reduction of input tax by recipient?

  1. As per Section 43 of the CGST Act, the details of credit notes issued by the supplier in respect of outward supply and claimed as reduction in output tax liability has to be matched with a corresponding reduction of input tax by the recipient of the supply.
  2. Further, the credit note issued shall also be matched for duplication of reduction of output tax liability.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.40)

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Illustration for ITC mismatch

 Goods supplied by A to B in the month of August 2017
 Value of goods =  1,000/-
 GST = 200/-
 A does not declare the details of such supplies in FORM GSTR-1.
 B claims input tax deduction of  200 by adding the details of such supply in
FORM GSTR-2.
 A rejects the communication in FORM GSTR-1A.
 The department issues FORM GST MIS-1 to the supplier and FORM GST MIS-2 to the recipient in the month of September 2017.
 The supplier does not rectify the discrepancy by September 2017.
 The department adds 200 to the output tax liability of B for the month of
October 2017.
 B is liable to pay 200 along with interest for the period August 2017 to October 2017.
 A rectifies the discrepancy in the month of December 2017.
 B can reduce output tax liability for January 2017 by 200. B will also be eligible for refund of interest paid earlier.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.39)

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The discrepancy communicated in FORM GST MIS-1 to the supplier has been rectified in subsequent return filed by the supplier. Should the recipient avail the credit once the supplier rectifies the return?

  1. The input tax credit which remains unmatched is added to the output tax liability of the recipient in the month succeeding the month in which FORM GST MIS-2 is communicated to the recipient.
  2. However, if the supplier rectifies the discrepancy within the date for filing the return for the period of September of the succeeding financial year or before the annual return is submitted by him, then the recipient is eligible to reduce the output tax liability to the extent of differential tax liability paid on account of such input tax mismatch.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.38)

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On a perusal of the provisions relating to mismatch of input tax credit, it is noticed that the tax payable on account of mismatch of input tax credit is added to the output tax liability of the recipient. Why is the recipient penalised for such mismatch?

As per section 155 of the CGST Act, if any person claims input tax credit, then the burden of proving such claim lies on him. Therefore, if the supplier does not declare the supplies or declares output tax lower than the amount claimed as credit, the recipient is burdened with the differential tax liability.

(ICAI FAQ PUBLICATIONS 06-09-2017 RETURNS : FAQ NO.37)